Balance of payments and Exchange Rates

Slides:

Advertisements

Similar presentations

Objectives Explain how ER is determined in floating ER system. Reasons causing fall in ER – depreciation Reasons causing rise in ER - appreciation.

Advertisements

Exchange Rate Determination 4 4 Chapter South-Western/Thomson Learning © 2003.

Ch. 9: The Exchange Rate and the Balance of Payments.

Highers Economics The sterling exchange rate Does a fall in the pound matter? The sterling exchange rate Does a fall in the pound matter?

Ch. 10: The Exchange Rate and the Balance of Payments.

C HAPTER 13 EXCHANGE RATES AND THE FOREIGN EXCHANGE MARKET: AN ASSET APPROACH.

Chapter 16 International Finance and Exchange Rates Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.

 Exchange Rates. Exchange rates  The exchange rate refers to the rate at which national currencies can be exchanged for each other in the foreign exchange.

Economic Goal 4: External Stability Exchange Rate.

External Sector Econ 102 _2015. External Sector How is a country linked with other countries in the global world? 1)There are exchange of Goods and Services.

Balance of payments and Exchange Rates. Balance of payments & exchange rates The balance of payments account Example of UK balance of payments The balance.

INTERNATIONAL TRADE LEARNING OUTCOME 8. THE BENEFITS OF TRADE Absolute Advantage Comparative Advantage Economies of Large Scale When a country can produce.

The Balance of Payments Account  Meaning of the balance of payments  The current account.

Balance of Payments and Exchange Rates.

Module 42 May  Foreign exchange market – where currencies are traded  Exchange rates – the prices at which currencies trade.

External Sector Econ 102 _2013. External Sector How is a country linked with other countries in the global world? 1)There are exchange of Goods and Services.

21 The Balance of Payments, Exchange Rates, and Trade Deficits McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Lecture 7: Open Economy. Opening the Economy Goods markets –Imports and exports –Tariffs and quotas Financial markets –Domestic and foreign financial.

1 ECON Designed by Amy McGuire, B-books, Ltd. McEachern CHAPTER International Finance Macro.

Unit-5 Macro Review Foreign Exchange & Balance of Payments.

1 MARKET WATCH TOTAL NET ASSETS OF FUNDS DOMICILED IN FINLAND.

1 Simple View of Exchange Rate Determination. 2 EUR exchange rate against the dollar: EUR value in USD.

What explains the recent movement of the pound sterling? To see more of our products visit our website at Amy Chapman, Gordonstoun School.

International Economics Trade, The Balance of Payments and Exchange Rates.

International Trade and Exchange Rates Outline Balance of payments (BOP) accounting How open is the U.S. economy? Description of international trade Exchange.

Chapter 5: Foreign Exchange Markets and the Balance of Payments

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 18 International Finance and Exchange Rates.

Lecture notes Prepared by Anton Ljutic. © 2004 McGraw–Hill Ryerson Limited Exchange Rates and the Balance of Payments CHAPTER TEN.

Exchange rates. Exchange Rate Systems For an economy open to international trade, the exchange rate is a crucial variable. It influences the competitiveness.

Eco 200 – Principles of Macroeconomics Chapter 7: Foreign Exchange Markets and the Balance of Payments.

Tutor2u ™ Exchange Rates A2 Economics Presentation 2005.

Price (2000 dollars per barrel) Year. Quantity (millions of barrels per day) Year.

Graphing Currency Movements

International Trade and Finance: Foreign Exchange Market AP Economics Mr. Bordelon.

External Sector Econ 102 _2013. External Sector How is a country linked with other countries in the global world? 1)There are exchange of Goods and Services.

The Balance of Payments, Exchange Rates, and Trade Deficits Chapter 38 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights.

Purchasing power parity, effective exchange rates and types of exchange rate.

With floating exchange rates, changes in market demand and market supply of a currency cause a change in value. In the diagram below we see the effects.

AS Economics PowerPoint Briefings Introduction to Macroeconomics AS Economics.

EXCHANGE RATES UNIT 26. DISCUSSION  You probably have at least one banknote in your pocket, wallet or purse. How much is it worth in other currencies?

Module The Foreign Exchange Market KRUGMAN'S MACROECONOMICS for AP* 42 Margaret Ray and David Anderson.

Balance of Payments and Exchange Rates. The Balance of Payments Account Meaning of the balance of payments The current account Meaning of the balance.

AS Economics PowerPoint Briefings 2007 tutor2u ™ tutor2u ™ Exchange Rates.

MUTUAL FUND MARKET WATCH

International Monetary Systems

Chapter 9 The Balance of Payments and Exchange Rates

The Open Economy.

EXCHANGE RATES UNIT 26.

Exchange Rates The rate at which one currency can be exchanged for another e.g. £1 = $1.90 £1 = €1.50 Important in trade.

36 Exchange Rates, the Balance of Payments, and Trade Deficits.

36 Exchange Rates, the Balance of Payments, and Trade Deficits.

FINANCIAL ENVIRONMENT Chapter Three

Chapter 14 The exchange rate

INTERNATIONAL FINANCIAL POLICY

MUTUAL FUND MARKET WATCH

Eco 200 – Principles of Macroeconomics

MUTUAL FUND MARKET WATCH

Graphing Currency Movements

Mutual Fund Market Watch

Mutual Fund Market Watch

Mutual Fund Market Watch

MUTUAL FUND MARKET WATCH

MUTUAL FUND MARKET WATCH

TABLE 15.1 Exchange Rates. TABLE 15.1 Exchange Rates.

MUTUAL FUND MARKET WATCH

Mutual Fund Market Watch

MUTUAL FUND MARKET WATCH

Mutual Fund Market Watch

Balance of Payments.

Exchange Rates Tuesday, 21 May 2019.

Presentation transcript:

Balance of payments and Exchange Rates

Balance of payments & exchange rates The balance of payments account Example of UK balance of payments

Balance of payments & exchange rates The balance of payments account The current account

UK balance of payments: 2001 (£ millions)

UK balance of payments: 2001 (£ millions)

UK balance of payments: 2001 (£ millions)

UK balance of payments: 2001 (£ millions)

UK balance of payments: 2001 (£ millions)

UK balance of payments: 2001 (£ millions)

Current account balance as % of GDP in selected countries: 1970–2003

Current account balance as % of GDP in selected countries: 1970–2003 UK

Current account balance as % of GDP in selected countries: 1970–2003 UK USA

Current account balance as % of GDP in selected countries: 1970–2003 Japan UK USA

Balance of payments & exchange rates The balance of payments account The capital account

UK balance of payments: 2001 (£ millions)

Balance of payments & exchange rates The balance of payments account The financial account

UK balance of payments: 2001 (£ millions)

UK balance of payments: 2001 (£ millions)

UK balance of payments: 2001 (£ millions)

UK balance of payments: 2001 (£ millions)

Balance of payments & exchange rates The balance of payments account The overall balance of payments

UK balance of payments: 2001 (£ millions)

UK balance of payments: 2001 (£ millions)

Balance of payments & exchange rates

Sterling exchange rates: 1980–2003

Sterling exchange rates: 1980–2003

Sterling exchange rates: 1980–2003

Sterling exchange rates: 1980–2003

Balance of payments & exchange rates Determination of the exchange rate

Determination of the rate of exchange $ price of £ Q of £

Determination of the rate of exchange $ price of £ D by USA Q of £

Determination of the rate of exchange S by UK b a QD QS $ price of £ D by USA Q of £

Determination of the rate of exchange S by UK $ price of £ d c QS QD D by USA Q of £

Balance of payments & exchange rates Changes in the exchange rate

Floating exchange rates: movement to a new equilibrium / £ D1 Q of £

Floating exchange rates: movement to a new equilibrium / £ D1 Q of £

Floating exchange rates: movement to a new equilibrium / £ D1 D2 Q of £

Balance of payments & exchange rates Speculation against exchange rate movements

Stabilising speculation er1 Exchange rate D1 O Quantity of £s

Stabilising speculation er1 Exchange rate er2 D1 D2 O Quantity of £s

Stabilising speculation er1 er3 Exchange rate er2 D1 D2 D3 O Quantity of £s

Destabilising speculation er1 Exchange rate D1 O Quantity of £s

Destabilising speculation er1 er2 Exchange rate D1 D2 O Quantity of £s

Destabilising speculation er1 er2 Exchange rate er3 D1 D3 D2 O Quantity of £s

Balance of payments & exchange rates Movements in the sterling exchange rate over time

$ / £ exchange rate and £ exchange rate index: 1976-2003

$ / £ exchange rate and £ exchange rate index: 1976-2003

$ / £ exchange rate and £ exchange rate index: 1976-2003 1990=100 $ / £

$ / £ exchange rate and £ exchange rate index: 1976-2003 1990=100 $ / £

Balance of payments & exchange rates Movements in the dollar/euro exchange rate from 1999 to 2003

Fluctuations between the euro and the dollar

Fluctuations between the euro and the dollar US interest rate

Fluctuations between the euro and the dollar US interest rate ECB interest rate

Fluctuations between the euro and the dollar US interest rate $ / ECB interest rate $ /